Green Car Standard is an Important Step Forward With Major Limits

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"Green Car Standard is an Important Step Forward With Major Limits"

Smart Car

The new fuel economy standards being promulgated by the Obama administration are a major step forward relative to the business-as-usual baseline. You can see CAP’s Dan Weiss, CAP’s Joe Romm, and even Dave McCurdy form the Auto Alliance for some gushing praise. And this really is a huge deal, an enormous step forward that will do a great deal of good.

That said, to bring the dark lining to your silver cloud it’s still the case that as a policy matter trying to reduce fuel consumption purely through the limits of CAFE standards has some real limits. As I’ve said several times before, it would be better to have higher gasoline taxes as a complement or a supplement for tighter fuel efficiency standards. The reasons are twofold. One is that CAFE does nothing to encourage the purchase of more fuel efficient used cars except on a very long time horizon. The other, more important one, is that fuel consumption has two determinants—the fuel economy of the vehicle, and the number of miles the vehicle drives. And, clearly, different people drive different amounts. Some people’s commutes are longer than others. Some people people car pool. Some people walk or bike or use transit. And this stuff makes a difference to overall fuel consumption. Any policy that leaves this entire suite of issues off the table is distinctly sub-optimal.

That said, on its own terms this is a huge step forward.

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